Latest / Masters in Business / Peter Mallouk on Making Financial Planning Easier

Transcript

Peter Mallouk on Making Financial Planning Easier · Masters in Business

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Master's in
• 0:11
  Speaker 1: Business with Barry Ridholds on Bloomberg Radio. This week on
• 0:16
  Speaker 1: the podcast, I have an extra special guest. What can
• 0:19
  Speaker 1: I say about Peter Maluke. He began as an attorney,
• 0:24
  Speaker 1: working on things like taxes and trust and estates and
• 0:27
  Speaker 1: consulting for various RIA firms when he became an RIA
• 0:33
  Speaker 1: and eventually bought Creative Planning when it had you know,
• 0:37
  Speaker 1: a handful of clients and you know, thirty thirty five
• 0:40
  Speaker 1: million dollars. He has since built Creative Planning into one
• 0:45
  Speaker 1: of the nation's largest rias and an absolute powerhouse, running
• 0:50
  Speaker 1: over three hundred billion dollars. Peter is the guy I
• 0:53
  Speaker 1: look to when I want to learn things about how
• 0:56
  Speaker 1: to build a firm, how to grow organically, how to
• 0:59
  Speaker 1: think about out acquisitions, how to structure your company, really
• 1:04
  Speaker 1: to become an enterprise as opposed to merely being a business.
• 1:09
  Speaker 1: Peter is also the author of two really interesting books,
• 1:12
  Speaker 1: The Five Mistakes Every Investor Makes and How to Avoid Them,
• 1:16
  Speaker 1: and his latest book is Money Simplified. Whether you're an
• 1:20
  Speaker 1: RIA or an entrepreneur, whether you're interested in finding out
• 1:24
  Speaker 1: about who should manage your money and what you should
• 1:27
  Speaker 1: look at when you talk to creative planning. I thought
• 1:30
  Speaker 1: this conversation was absolutely fascinating, and I think you will
• 1:33
  Speaker 1: also with no further ado, my discussion with Creative Plannings
• 1:38
  Speaker 1: Peter Maluk.
• 1:39
  Speaker 2: It's great to be back there.
• 1:40
  Speaker 1: So I didn't mean to imply that the other books
• 1:43
  Speaker 1: weren't interesting. I just those are the two most recent
• 1:46
  Speaker 1: books I wanted to emphasize. But let's talk a little
• 1:49
  Speaker 1: bit about your background in your career, which is so interesting.
• 1:53
  Speaker 1: You get a jd MBA from the University of Kansas
• 1:57
  Speaker 1: in nineteen ninety six. That's an interesting combination. What was
• 2:02
  Speaker 1: the plan for your career with that combo?
• 2:05
  Speaker 2: Oh? So here was the brilliant plan. I had had
• 2:07
  Speaker 2: been an undergrad at KU for quite a while and
• 2:10
  Speaker 2: I was having an incredible time. My brothers were, you know,
• 2:13
  Speaker 2: three four years younger than me, so they were coming
• 2:15
  Speaker 2: in when I was a senior. I didn't want to leave,
• 2:18
  Speaker 2: and so I thought I'll just stay and get a
• 2:21
  Speaker 2: get a master's degree. And then I learned that KU
• 2:24
  Speaker 2: was launching this combination thing. Instead of doing a law
• 2:27
  Speaker 2: degree for three years and MBA for two, you could
• 2:30
  Speaker 2: combine them and do it in four and if you
• 2:31
  Speaker 2: went in the summers, you could do it in three.
• 2:34
  Speaker 2: And so I signed up for it with no plan
• 2:36
  Speaker 2: other than to stay at KU a little bit, a
• 2:38
  Speaker 2: little that was the plan. I'm having fun.
• 2:43
  Speaker 1: Your siblings went to the same school at the same time. Well,
• 2:46
  Speaker 1: KU is a big joint. What was that like?
• 2:48
  Speaker 2: It was a blast? I mean, it's it's a it's
• 2:50
  Speaker 2: a really really fun town. My oldest son just graduated
• 2:54
  Speaker 2: from there. My my youngest two are going there next year.
• 2:57
  Speaker 2: So I get to relive it, you know, through them
• 2:59
  Speaker 2: a little bit. And many things have changed, but a
• 3:02
  Speaker 2: lot of things are exactly the same. That's one of
• 3:05
  Speaker 2: the reasons. I think a lot of people like going
• 3:07
  Speaker 2: back to the schools that they graduated from.
• 3:09
  Speaker 1: So long before you went to KU, Creative Planning was
• 3:13
  Speaker 1: formed in Kansas. That was back in nineteen eighty three.
• 3:17
  Speaker 1: What led you to acquire the company in two thousand
• 3:20
  Speaker 1: and four? You were an employee at the time, weren't you.
• 3:23
  Speaker 2: I was, so I had started out, you know, accidental
• 3:26
  Speaker 2: journey to becoming an advisor, and I really found myself
• 3:28
  Speaker 2: as an advisor to advisors. So I would go from
• 3:31
  Speaker 2: one brokerage house to another, and one independent advisor to
• 3:34
  Speaker 2: another from morning till you know, the day was over,
• 3:37
  Speaker 2: and I would do legal work for their clients, or
• 3:39
  Speaker 2: give tax advice, or do planning or investments. And at
• 3:43
  Speaker 2: some point, the people that were running the financial planning
• 3:45
  Speaker 2: department for Creative Planning, which was a sister company to
• 3:48
  Speaker 2: an insurance company, there were three guys that were selling
• 3:51
  Speaker 2: disability insurance to physicians in Kansas City. One of them
• 3:55
  Speaker 2: passed away at a young age, one became disabled to
• 3:58
  Speaker 2: a young age, and the people that were running the
• 4:01
  Speaker 2: financial planning arm had left, and the owner of that
• 4:03
  Speaker 2: firm is incredible guy, had brought me in to handle
• 4:08
  Speaker 2: the planning and investments for Creative Planning. So while I
• 4:10
  Speaker 2: was doing all this work for other advisors, I was
• 4:12
  Speaker 2: also managing you know, their thirty or forty clients that
• 4:15
  Speaker 2: they had at the time too. And that's where, you know,
• 4:18
  Speaker 2: from ninety eight to four, I got this sense of Hey,
• 4:21
  Speaker 2: all day, every day, I'm doing little pieces for different people.
• 4:25
  Speaker 2: What if there was a firm that did all of
• 4:28
  Speaker 2: this in one place.
• 4:29
  Speaker 1: One quarterback to oversee everything that's right? Oh four, you
• 4:33
  Speaker 1: do the acquisition. I mean you're working as an attorney
• 4:36
  Speaker 1: for a advisory firm. It's kind of hard to write
• 4:39
  Speaker 1: a big check at that point. How did this process
• 4:42
  Speaker 1: go about you for you acquiring, Well, I.
• 4:44
  Speaker 2: Mean it was it was managing a very very small
• 4:46
  Speaker 2: amount of money, so there was no big check. There
• 4:48
  Speaker 2: was no big check to be written, or I wouldn't
• 4:50
  Speaker 2: have been able to buy it. And he was, you know,
• 4:53
  Speaker 2: very great. I mean we're talking like, you know, six
• 4:56
  Speaker 2: figure check right spread out over you know, sixty months.
• 4:59
  Speaker 2: So it was not a this was not a big
• 5:01
  Speaker 2: operation at the time.
• 5:03
  Speaker 1: And thirty four million dollars not a lot of money,
• 5:05
  Speaker 1: that's right. And now it's up. What is that a
• 5:08
  Speaker 1: thousand x? You're over three hundred billion. Let's talk about
• 5:12
  Speaker 1: how you got there. You for the first what is
• 5:15
  Speaker 1: that fifteen years, did no acquisitions, so strictly organically grew
• 5:21
  Speaker 1: from thirty four million to forty two billion. That is
• 5:25
  Speaker 1: a giant one hundred x set of gains. How do
• 5:29
  Speaker 1: you grow a company organically that quickly?
• 5:34
  Speaker 2: Well, I think we were ahead of the game and
• 5:35
  Speaker 2: a lot of things that now a lot of firms
• 5:37
  Speaker 2: have started to do. And I think like we were
• 5:39
  Speaker 2: doing financial planning without a separate fee. We were passive
• 5:42
  Speaker 2: on the equity side. We never used hedge funds, but
• 5:44
  Speaker 2: we used private equity, private lending. You know, very early
• 5:47
  Speaker 2: on for an RIA, we were doing legal, tax, investments,
• 5:50
  Speaker 2: trust services, planning all under one roof. That was definitely
• 5:54
  Speaker 2: revolutionary at the time. You know, there are the other
• 5:56
  Speaker 2: are firms. You know that your ten years fifteen years
• 5:58
  Speaker 2: later started to add those things. We had a very
• 6:00
  Speaker 2: big hit start and the market really responded to those things.
• 6:04
  Speaker 2: Like if you look here twenty years later, where did
• 6:06
  Speaker 2: the market go On the equity side, It went from
• 6:08
  Speaker 2: active to passa while we were there in the beginning.
• 6:10
  Speaker 2: On the private side, where has it gone from hedge
• 6:13
  Speaker 2: funds to private investments? We were there very early. It
• 6:16
  Speaker 2: used to charge separately for a planning fee. Now it's
• 6:18
  Speaker 2: more the way creative planning did it. And this idea
• 6:21
  Speaker 2: of adding other services in one place. The market's moving
• 6:24
  Speaker 2: there too. So I think we were just ahead on
• 6:26
  Speaker 2: all of those things. We had a big advantage in
• 6:28
  Speaker 2: that regard. I think when people are looking for an advisor,
• 6:30
  Speaker 2: they like to see usually two things. I think one
• 6:34
  Speaker 2: they want to see that you know what you're doing
• 6:37
  Speaker 2: and it's very hard to figure out that somebody knows
• 6:39
  Speaker 2: what they're doing. But they could look at Creative and go, well,
• 6:41
  Speaker 2: Creator's been doing this a very very long time, right,
• 6:43
  Speaker 2: And if they can go talk to one hundred advisors,
• 6:45
  Speaker 2: none of them would have been doing what we're doing
• 6:48
  Speaker 2: back then, right, So I think they just know, hey,
• 6:50
  Speaker 2: we've been doing it longer, and we've got probably more people,
• 6:54
  Speaker 2: you know, doing these services, more specialties, more people with
• 6:57
  Speaker 2: those designations. We're now divided out and working with ultra
• 7:00
  Speaker 2: affluent people and the mass affluent and having different teams
• 7:03
  Speaker 2: that serve all of these And I think an investor,
• 7:06
  Speaker 2: a prospective client can figure that out in pretty short order.
• 7:09
  Speaker 2: You know, when my son and I were walking here
• 7:11
  Speaker 2: to the studio, we were trying to figure out, you know,
• 7:13
  Speaker 2: where to eat. We didn't have any time. We're gonna
• 7:15
  Speaker 2: have to eat and walk right so here in New
• 7:16
  Speaker 2: York City, and we got in late. We wanted to
• 7:19
  Speaker 2: make it on time here as close as we could.
• 7:21
  Speaker 2: So what do we do? We stopped at a food truck,
• 7:23
  Speaker 2: a bunch of food trucks, but there was one food
• 7:25
  Speaker 2: truck that say lone voted but best whatever, Trip Advisor
• 7:29
  Speaker 2: all that that's the one we stopped at, right, because
• 7:31
  Speaker 2: it feels like there's some social proof there that is
• 7:35
  Speaker 2: food Truck's food's probably better than the other ones. It's
• 7:37
  Speaker 2: sure enough. My son was like, if I was in
• 7:39
  Speaker 2: Can't City, I wo'd eat this every day, you know,
• 7:41
  Speaker 2: for lunch. I think when you look at an advisor,
• 7:43
  Speaker 2: you know we're both in the professions. So it seems, well,
• 7:46
  Speaker 2: I mean, does it that big a deal to we
• 7:47
  Speaker 2: be doing get a long time? Well? I mean, if
• 7:49
  Speaker 2: you get yourself out of the professional profession in a
• 7:51
  Speaker 2: medical condition, right, and you're looking for a doctor, you
• 7:54
  Speaker 2: like the doctor that's been doing it for a few decades,
• 7:57
  Speaker 2: with an enormous team that's invested in all this technology,
• 8:00
  Speaker 2: it's probably already made the mistakes they're going to make
• 8:02
  Speaker 2: that if something weird shows up, they've probably seen it before.
• 8:05
  Speaker 2: That is creative planning. And so the growth, it compounds
• 8:09
  Speaker 2: because the longer you've been doing it, the more that
• 8:12
  Speaker 2: credibility you have.
• 8:13
  Speaker 1: So you mentioned you have all these different teams and
• 8:16
  Speaker 1: all these different people. How do you maintain the corporate
• 8:19
  Speaker 1: culture when you scale up one hundred x? Like that's
• 8:23
  Speaker 1: a real challenge. How do you keep old horses pulling
• 8:27
  Speaker 1: the sleigh in the same direction.
• 8:29
  Speaker 2: Why take this incredibly seriously because you know, in this business,
• 8:33
  Speaker 2: all you really have is what's in people's brains and
• 8:36
  Speaker 2: in their hearts. Right, You've got to have people that
• 8:37
  Speaker 2: know what they're doing and they care about people, right,
• 8:39
  Speaker 2: Because this isn't like we're not a hedge fund, we're
• 8:41
  Speaker 2: not a mutual fund. Nothing's wrong with those things, but
• 8:43
  Speaker 2: we're dealing with actual human beings. You know, whether a creative,
• 8:45
  Speaker 2: whether you're a CPA or an attorney or a planner,
• 8:48
  Speaker 2: a wealth manager or whatever, you're sitting across the table
• 8:50
  Speaker 2: from somebody, you have to have that kind of consultative
• 8:53
  Speaker 2: nature about you or you're not going to be successful,
• 8:56
  Speaker 2: certainly not be able to do right by the client.
• 8:58
  Speaker 2: And so I look at culture a couple of things. One,
• 9:01
  Speaker 2: it's who you let in in the first place. Right,
• 9:03
  Speaker 2: So when I'm interviewing, it's not just who I want in,
• 9:06
  Speaker 2: it's who do I want to keep out? So I'm
• 9:09
  Speaker 2: always the last stop in an interview. Mine's always just
• 9:12
  Speaker 2: a few minutes.
• 9:12
  Speaker 1: Even today with how many of you guys have over
• 9:16
  Speaker 1: a thousand employees, twenty four hundred. Yeah, So every one
• 9:19
  Speaker 1: of them. You gave the stamp of approval before they
• 9:21
  Speaker 1: came in.
• 9:22
  Speaker 2: Yeah, and I'll block quite a few now their background
• 9:25
  Speaker 2: check before they get to be somebody is already. Somebody's
• 9:28
  Speaker 2: already said, hey, I like them for my department. They
• 9:30
  Speaker 2: know what they're doing and all that we're not, you know,
• 9:31
  Speaker 2: we're not perfect. But there's a lot of screens in here.
• 9:34
  Speaker 2: But what I'm just looking for is, you know, every
• 9:36
  Speaker 2: now and then you have a leader and they're just
• 9:38
  Speaker 2: desperate to fill a role, right, and you really have
• 9:40
  Speaker 2: to you want to avoid that desperate hire where they
• 9:42
  Speaker 2: bring that jerk in right right, Because you know, I
• 9:46
  Speaker 2: was talking to somebody the other day about are most
• 9:48
  Speaker 2: people good? Are most people bad? And we were talking about, well, yeah,
• 9:50
  Speaker 2: think about all the violent crime and assaults and all
• 9:54
  Speaker 2: this stuff, and the reality is most people are good,
• 9:56
  Speaker 2: but one bad person causes so much damage. We had
• 10:02
  Speaker 2: someone that became a client because someone was stealing from
• 10:04
  Speaker 2: them and employe was stealing from them. Will turns out
• 10:05
  Speaker 2: they were stealing from four other businesses too, do you
• 10:07
  Speaker 2: know what I mean? Like so, but that's normal, right,
• 10:09
  Speaker 2: someone who commits sexual assault, it's a very tiny group
• 10:12
  Speaker 2: of people that commit sexual assaults. The problem is the
• 10:13
  Speaker 2: average person does it over and over and over, so
• 10:16
  Speaker 2: you create disproportion victims. Well, I look at it like
• 10:19
  Speaker 2: weeds in a garden. You get that one person in
• 10:21
  Speaker 2: your firm and they're a little bit of a jerk,
• 10:23
  Speaker 2: or they're overly self serving, or they can turn the
• 10:26
  Speaker 2: culture very very fast and cause a lot of distraction.
• 10:29
  Speaker 2: I think the biggest successes I've had in my career
• 10:32
  Speaker 2: are who I've hired. The biggest failures I've had in
• 10:34
  Speaker 2: my career are are who I've hired. And so I think,
• 10:36
  Speaker 2: like you look at the social curve, part of it's
• 10:38
  Speaker 2: attracting the right talent, but getting that you know, sociopath
• 10:41
  Speaker 2: or that kind of like really narcissistic type personality, keeping
• 10:45
  Speaker 2: that person out of your firm. I think that's step
• 10:47
  Speaker 2: one in the culture. Step two is if you make
• 10:49
  Speaker 2: a mistake, and we make mistakes, correct it fast. I'm
• 10:52
  Speaker 2: really bad at this, by the way, Verry.
• 10:53
  Speaker 1: Really it's hard to do. We all know the expression
• 10:57
  Speaker 1: high or slowly fire fast, but it's very It's much
• 11:01
  Speaker 1: harder to do than the sound.
• 11:02
  Speaker 2: Yeah, And what's changed my thinking on this is I
• 11:04
  Speaker 2: used to just drag it out and drag it out
• 11:05
  Speaker 2: and drag it out. And this you know woman in
• 11:07
  Speaker 2: our firm who started with me early on, she you know,
• 11:09
  Speaker 2: came to me once she said like, hey, you think
• 11:10
  Speaker 2: you're doing this person a favor, but you're really doing
• 11:12
  Speaker 2: is you're punishing the rest of us. And that just
• 11:13
  Speaker 2: changed my thinking about it overnight, Like now I feel
• 11:16
  Speaker 2: like you're sending a message to the rest of the
• 11:18
  Speaker 2: firm and what you'll tolerate, whether it's in competence or
• 11:21
  Speaker 2: ill will or whatever. So getting people out, you know, quickly,
• 11:24
  Speaker 2: is another very big piece of it. And then the
• 11:25
  Speaker 2: other part is who do you make a leader. You
• 11:27
  Speaker 2: can't just make the leader the person who was really
• 11:29
  Speaker 2: good at something, right, Like you can't say, okay, you're
• 11:32
  Speaker 2: really good at taxes, I'm going to make you the
• 11:33
  Speaker 2: head of the tax group.
• 11:34
  Speaker 1: Or you're really you got a different set of skills.
• 11:36
  Speaker 2: Yes, you really need somebody who embodies the culture where
• 11:41
  Speaker 2: you know, someone was just asking us we do this
• 11:43
  Speaker 2: thing called ask Me Anything at Creative Planning where every
• 11:46
  Speaker 2: six months, separate from the other things we do, there's
• 11:48
  Speaker 2: just an hour people can ask me whatever they want.
• 11:50
  Speaker 2: And somebody said, well, what do you know? What's the
• 11:52
  Speaker 2: message you want your leaders to give? And I said,
• 11:54
  Speaker 2: I want my leader to be the message. Right. If
• 11:56
  Speaker 2: you have to ask what the the leader should just
• 11:59
  Speaker 2: persona what they want, what the example is of what
• 12:03
  Speaker 2: it's supposed to be. That's the type of person you
• 12:05
  Speaker 2: got to do all those things intentionally. Culture is very fragile.
• 12:08
  Speaker 2: I think we've been graded, and I think a big
• 12:10
  Speaker 2: part of it is that we've got the right leaders
• 12:11
  Speaker 2: in place.
• 12:12
  Speaker 1: Let's also talk about your headquarters. You're an overland park, Kansas.
• 12:18
  Speaker 1: The typical investment farm seems to be east coast or
• 12:21
  Speaker 1: west coast. What are the advantages of being located in Kansas?
• 12:25
  Speaker 2: See this is a happy accident too, kind of like
• 12:28
  Speaker 2: how I wound up with my majors or wound up
• 12:30
  Speaker 2: in the profession. It's just I was born and raised
• 12:32
  Speaker 2: in Kansas City and just was never ambitious enough to
• 12:35
  Speaker 2: go do anything else. You know, when my brothers moved
• 12:37
  Speaker 2: to Dallas and one moved to la and they both
• 12:39
  Speaker 2: enormously you know successful. All my aunts and uncles moved
• 12:42
  Speaker 2: to different cities. But I graduated, went back to Kansas City,
• 12:46
  Speaker 2: got a job, and next thing I knew I was
• 12:47
  Speaker 2: running Creative Planning, and by the time I even thought
• 12:49
  Speaker 2: about where I was located, Creative Planning had been you know,
• 12:52
  Speaker 2: too successful to consider anything else. Once I tried to
• 12:54
  Speaker 2: get my family to move twenty blocks and my kids started,
• 12:58
  Speaker 2: you know, screaming and ran upstairs clear and nothing, you know,
• 13:01
  Speaker 2: nothing was going to happen. So but it's been absolutely
• 13:03
  Speaker 2: amazing because to this day in my life, I have
• 13:06
  Speaker 2: not done a coast to coast flight. I mean I
• 13:09
  Speaker 2: travel every week, and it's very easy to get around
• 13:13
  Speaker 2: the country. If you are are you're.
• 13:14
  Speaker 1: Never more than two and a half hours away from anyway.
• 13:17
  Speaker 2: Everything's pretty everything's pretty probably yeah, yeah, I mean continental US, right,
• 13:21
  Speaker 2: so everything's really easy to get to something, to visit
• 13:24
  Speaker 2: an office, see a team or or give it a presentation,
• 13:27
  Speaker 2: or see a client. You know, I can do it.
• 13:30
  Speaker 2: And I also think that there is something to be
• 13:32
  Speaker 2: said for and I think it sounds cliche, but it's
• 13:35
  Speaker 2: not just this midwack Midwest ethics, Midwest work ethic and
• 13:40
  Speaker 2: and kind of the attitude, this bias towards integrity. I
• 13:43
  Speaker 2: found it very very easy to hire very high quality people,
• 13:47
  Speaker 2: and so many of our firm's partners are based in
• 13:49
  Speaker 2: Kansas City too.
• 13:50
  Speaker 1: We call it Midwest nice, yes, which it really is.
• 13:55
  Speaker 1: We have family in Chicago. Every time we're there every
• 13:57
  Speaker 1: year for Thanksgiving, every time we're local, it's like everybody
• 14:00
  Speaker 1: here is just so delightful. That's right, they're just so pleasant.
• 14:04
  Speaker 1: I guess it's because they're not in a rush and
• 14:06
  Speaker 1: the real estate isn't as expensive, so people are less stressed.
• 14:09
  Speaker 1: That's what I usually talk it up to. But Midwest
• 14:12
  Speaker 1: nice is really a thing.
• 14:14
  Speaker 2: It's really a thing. Yeah, there's a lot of reasons,
• 14:17
  Speaker 2: but it's a real thing that I appreciate more and
• 14:19
  Speaker 2: more every year that goes by.
• 14:20
  Speaker 1: Let's talk a little bit about the growth at Creative Planning.
• 14:24
  Speaker 1: It was organic for the first fifteen years, and then
• 14:27
  Speaker 1: in twenty nineteen you did a few acquisitions. First off,
• 14:31
  Speaker 1: what led you to the decision to say, hey, we've
• 14:35
  Speaker 1: gone as far as we think we can organically, let's
• 14:39
  Speaker 1: take advantage of all this cheap capital around and start
• 14:42
  Speaker 1: doing acquisitions.
• 14:43
  Speaker 2: So really, for us, I had never occurred to me
• 14:46
  Speaker 2: to even do an acquisition. We were from the very
• 14:49
  Speaker 2: first month growing faster as fast as we could possibly handle.
• 14:54
  Speaker 2: It was just moving so quickly. We've always been higher.
• 14:58
  Speaker 2: Every quarter in the history of creative play has been
• 15:00
  Speaker 2: positive net inflows every quarter in the history of creative
• 15:03
  Speaker 2: We've been hiring, right, and we're just growing, growing, growing, growing.
• 15:06
  Speaker 2: But you look at even over that period, Forbes had
• 15:08
  Speaker 2: done a ranking of the fastest growing firms in the
• 15:10
  Speaker 2: United States and we were number one on that list,
• 15:12
  Speaker 2: and that was ten years in. It was over the
• 15:14
  Speaker 2: ten year period. Even then, if you went to an
• 15:18
  Speaker 2: average American city and visited one of our offices, we
• 15:21
  Speaker 2: probably didn't have a physical office. We probably had one
• 15:24
  Speaker 2: or two advisors, and in that particular city, we might
• 15:28
  Speaker 2: have managed, you know, eight hundred million dollars, right, So
• 15:31
  Speaker 2: it was clear to me that I could do this
• 15:32
  Speaker 2: till I was one hundred and ten, and I was
• 15:35
  Speaker 2: not going to be able to build a national independent firm.
• 15:38
  Speaker 2: I might have had the biggest independent ria, you know,
• 15:41
  Speaker 2: at at doing that pace, I might have we would
• 15:44
  Speaker 2: have continued to be successful. But we had sat around
• 15:47
  Speaker 2: a few of us and said what do we want
• 15:48
  Speaker 2: to do, and we said, we have this opportunity to
• 15:50
  Speaker 2: set the standard of what a client should receive from
• 15:54
  Speaker 2: an independent wealth manager. And we looked at our competitors
• 15:56
  Speaker 2: of who else we thought might be that standard, and
• 15:58
  Speaker 2: we thought, you know, we you know, we're proud of
• 15:59
  Speaker 2: what doing. We thought, Hey, this is the right way
• 16:02
  Speaker 2: to do it. This is the right investment approach, this
• 16:03
  Speaker 2: is the right wealth management approach. We have this opportunity
• 16:05
  Speaker 2: to do this, let's do it right. And so along
• 16:08
  Speaker 2: the way we made one acquisition, very much by accident,
• 16:12
  Speaker 2: Metafather and Son that turned out to be wonderful. But
• 16:15
  Speaker 2: what we've observed from them was they grew faster when
• 16:17
  Speaker 2: they were with us. Their advisors all stayed and were
• 16:19
  Speaker 2: very happy. Their clients got more services, they referred more,
• 16:22
  Speaker 2: so their growth rate went up. And we were like,
• 16:24
  Speaker 2: wait a second. We did all of this and we
• 16:26
  Speaker 2: doubled our presence in that city was Minneapolis. This is
• 16:30
  Speaker 2: the recipe, And we went back and started to call
• 16:32
  Speaker 2: all the advisors over the years that had called us,
• 16:35
  Speaker 2: and the acquisitions began. But organically, we've actually, excluding acquisitions,
• 16:41
  Speaker 2: grown more in the last five years than the previous ten.
• 16:44
  Speaker 1: Wow.
• 16:44
  Speaker 2: So the organic growth is accelerated, but the acquisitions have
• 16:48
  Speaker 2: been a nice way to complement it. With our goal
• 16:50
  Speaker 2: being to become more localized to clients. Basically in every
• 16:53
  Speaker 2: major market.
• 16:55
  Speaker 1: So tell us about the four toh one K acquisition
• 16:57
  Speaker 1: did that was a substantial purchase one hundred plus billion
• 17:02
  Speaker 1: dollars in four one K assets.
• 17:04
  Speaker 2: That's right. So you know, we on the on the
• 17:06
  Speaker 2: private well side, we work with the massive fluid, We
• 17:09
  Speaker 2: work with people that have ten million up and we
• 17:10
  Speaker 2: work with centi millionaires and billionaires. On the for one
• 17:13
  Speaker 2: K side, we were basically dealing with foreign K plans
• 17:17
  Speaker 2: that were from startup to one hundred or so million. Well,
• 17:20
  Speaker 2: we have sixty seventy thousand private clients, many of them
• 17:23
  Speaker 2: are CFOs CEOs of publicly traded companies, and they would say, well, hey,
• 17:27
  Speaker 2: before you talk to my team about the four and K,
• 17:29
  Speaker 2: how many one billion dollar four on K plans you have?
• 17:33
  Speaker 2: I would say, well, well none, and they're like, well
• 17:34
  Speaker 2: there's no way, you know what I mean, there's no
• 17:36
  Speaker 2: social proof there, right. And so what this acquisition did
• 17:40
  Speaker 2: was they were one of the three largest independent foreworn
• 17:43
  Speaker 2: K providers in the United States. A lot of publicly
• 17:46
  Speaker 2: traded companies multi billion dollar foreign K plans with tens
• 17:49
  Speaker 2: of thousands of participants. We bought, purchased that group, put
• 17:54
  Speaker 2: it in a creative They've grown quicker because they have
• 17:56
  Speaker 2: more of a wealth management backbone. They've got now financial wellness,
• 18:01
  Speaker 2: financial education. We're able to manage money, add new investments
• 18:04
  Speaker 2: at lower fees. We just have a lot of negotiating power,
• 18:07
  Speaker 2: so we've been able to do an enormous amount to
• 18:09
  Speaker 2: make the offering better. And they've grown quicker also from
• 18:12
  Speaker 2: referrals from our advisors and now those four K participants
• 18:15
  Speaker 2: are also learning about creative planning and coming over to
• 18:18
  Speaker 2: the private sizes. It's been a home run all the
• 18:20
  Speaker 2: way around for us.
• 18:21
  Speaker 1: Sounds like it. You were also very early in the
• 18:24
  Speaker 1: referral program with Schwab and you recently announced you were
• 18:27
  Speaker 1: joining the referral program with Fidelity. Both those companies have
• 18:33
  Speaker 1: notoriously loyal client basis. How do you get somebody who's
• 18:38
  Speaker 1: custodied with Schwab or custodied with Fidelity to put creative
• 18:45
  Speaker 1: planning first and not think of themselves as a custody client.
• 18:49
  Speaker 1: I know that sounds odd, but you know exactly what.
• 18:52
  Speaker 2: I'm saying, right Well, I think the thing about those
• 18:54
  Speaker 2: clients is, I mean, Schwab and Fidelity are the clear leader.
• 18:58
  Speaker 2: I don't you know, who's third. I don't know who
• 18:59
  Speaker 2: third is, right, which is now part of Schwab.
• 19:03
  Speaker 1: Right.
• 19:03
  Speaker 2: So these are enormous, incredible, and I think they're more
• 19:07
  Speaker 2: than custodians. And I think a lot of people just
• 19:09
  Speaker 2: want custody. They want to trade on their own. They're
• 19:11
  Speaker 2: never coming, you know, they're not going to come to
• 19:12
  Speaker 2: Creative planning. There's people that there are many solutions that
• 19:15
  Speaker 2: Shoab and Fideli offer their clients, and those people perfectly
• 19:18
  Speaker 2: satisfied with that. But Schwab and Fidelity give their their
• 19:21
  Speaker 2: teams this flexibility to say, look, if the client's best
• 19:23
  Speaker 2: served with another advisor, go ahead and refer them. And
• 19:27
  Speaker 2: I think that, you know, Schwab and Fidelity when they
• 19:30
  Speaker 2: find that to be the case, I think they find
• 19:32
  Speaker 2: Creative to be pretty unique in our offering and our expertise.
• 19:36
  Speaker 2: And the client also doesn't lose anything, Right, They're still
• 19:39
  Speaker 2: at Schwab, they are Fidelity. They've still got the same
• 19:41
  Speaker 2: account number, they still have their website, they still got
• 19:43
  Speaker 2: their financial consultant in the branch. They just have an
• 19:46
  Speaker 2: advisor advising them on the account.
• 19:47
  Speaker 1: Now, true story. When we launched, we were using TD
• 19:51
  Speaker 1: as our custodian and we would go on like you do.
• 19:54
  Speaker 1: We'd go on road trips, we'd meet people, we'd meet
• 19:56
  Speaker 1: existing clients, we'd meet prospective clients. And after like the
• 20:00
  Speaker 1: twelfth time, someone said, hey, I'm with Schwab. There there's
• 20:05
  Speaker 1: where my money is held. Love to hire you as
• 20:06
  Speaker 1: an advisor, but it can only be on on Schwab,
• 20:10
  Speaker 1: Like you hear that a dozen times, and oh maybe
• 20:12
  Speaker 1: there's maybe we should add Schwab as a custodian. Now
• 20:16
  Speaker 1: we got a couple of billion dollars with them. But
• 20:18
  Speaker 1: to get to that point, like it was like, wait,
• 20:20
  Speaker 1: it's a custodian. Where is this intense loyalty coming from
• 20:25
  Speaker 1: Fidelity and especially Schwab, It's it's like nothing else I've
• 20:30
  Speaker 1: ever seen.
• 20:30
  Speaker 2: Well, there's a I think, a very intense feeling of
• 20:34
  Speaker 2: safety and security and the brand carry both those brands
• 20:38
  Speaker 2: carry such you know, equity and you know what they should.
• 20:42
  Speaker 2: I mean, they've really delivered.
• 20:43
  Speaker 1: They've been around for half a century and done a
• 20:46
  Speaker 1: really good job. That's right, all right, So you mentioned
• 20:48
  Speaker 1: all the various services you offer, but when you began,
• 20:52
  Speaker 1: that wasn't the place you started from, right, You were
• 20:56
  Speaker 1: doing some estate planning and other legal services. Tell us
• 21:00
  Speaker 1: about the timeline that you went through adding these different services, Like,
• 21:05
  Speaker 1: when was that aha moment, Hey, let's just wrap everything
• 21:09
  Speaker 1: up in one nice package, put a bow on it,
• 21:13
  Speaker 1: and not have the client have to worry about any
• 21:16
  Speaker 1: financial issues.
• 21:17
  Speaker 2: Well, I mean the six years prior to Creative Planning
• 21:19
  Speaker 2: that I was doing you know, legal advice at one place,
• 21:21
  Speaker 2: tax another, planning and investments in another. So day one
• 21:25
  Speaker 2: of owning Creative that was the first day. Like that,
• 21:27
  Speaker 2: that first day we were like, okay, we're doing wills
• 21:29
  Speaker 2: and trust we're doing financial plans, we're going to manage
• 21:32
  Speaker 2: your money. Will be the trustee if you need us
• 21:34
  Speaker 2: to be. Now we was me and one other person.
• 21:36
  Speaker 2: But that's that's what we were on day one doing
• 21:39
  Speaker 2: those things. And what's really changed from then is this
• 21:42
  Speaker 2: the scale. You know, the number of people. I think
• 21:44
  Speaker 2: our tax group might be seven hundred people and the
• 21:47
  Speaker 2: law groups well over one hundred people. And so the
• 21:49
  Speaker 2: breadth and depth of expertise and the credentials and experience
• 21:53
  Speaker 2: and all of all of that. The special level of
• 21:55
  Speaker 2: specialization is you know, far beyond my wildest imagination back then.
• 22:01
  Speaker 2: But the offering itself, the core offering. That was day one.
• 22:04
  Speaker 1: So when did you first add ahead of tax? When
• 22:08
  Speaker 1: did you first add ahead of trust in the states
• 22:10
  Speaker 1: or insurance? Because when two people are doing everything right,
• 22:15
  Speaker 1: you know, it's such a challenge. But once you institutionalize
• 22:19
  Speaker 1: it with those hires, I would imagine everything began to explode.
• 22:23
  Speaker 2: Yeah. The first the first hire was someone to take
• 22:25
  Speaker 2: over you know, the day to day investing. The second
• 22:27
  Speaker 2: one was someone to take over the legal the next
• 22:31
  Speaker 2: was someone to take over insurance, then trust, and then
• 22:35
  Speaker 2: lastly you know, tax, and so that over time, each
• 22:38
  Speaker 2: of those and of course when you get the right person,
• 22:40
  Speaker 2: the growth explodes.
• 22:42
  Speaker 1: You know, how how long did that process take before
• 22:44
  Speaker 1: you had those six key people in place?
• 22:48
  Speaker 2: In the first few years, we had certain people in place,
• 22:51
  Speaker 2: but they just weren't the right people right, So we
• 22:53
  Speaker 2: had to get we had to get through to get
• 22:54
  Speaker 2: to the right leader of each over time, and that,
• 22:56
  Speaker 2: you know, really finishing it all out was only very recently.
• 22:59
  Speaker 2: We've added services along the way, but really getting it
• 23:02
  Speaker 2: stabilized and going about two thousand and nine.
• 23:05
  Speaker 1: And you even offer m and a consulting, I mean,
• 23:08
  Speaker 1: tell us about that you have that many clients that
• 23:11
  Speaker 1: are thinking about selling a business and need some help.
• 23:14
  Speaker 2: Well, this is the advantage of scale. So I think
• 23:17
  Speaker 2: about like with a number of clients, we have thousands
• 23:21
  Speaker 2: and thousands of them are business owners. So now you're
• 23:25
  Speaker 2: talking about consulting, but we also do outsourced CFO, outsourced HR,
• 23:29
  Speaker 2: we do bill pay, payroll, M and A managed it
• 23:35
  Speaker 2: four oh and K cybersecurity testing. So that business owner
• 23:40
  Speaker 2: client all those things that they care about protecting and
• 23:43
  Speaker 2: that are dollars sign related, they can look to the
• 23:46
  Speaker 2: Creative Planning Business Services Unit to help them with that. Yeah,
• 23:49
  Speaker 2: we definitely have enough clients to keep all those groups very,
• 23:52
  Speaker 2: very busy.
• 23:53
  Speaker 1: What about one of the hot new things is the
• 23:56
  Speaker 1: concier services for the ultra high net worth where you're
• 24:01
  Speaker 1: essentially taking over all of their bill pay and everything
• 24:06
  Speaker 1: from you know, buying a car to looking at real estate.
• 24:10
  Speaker 1: How far do you go down that path?
• 24:12
  Speaker 2: I would say that there's you know, it kind of
• 24:14
  Speaker 2: reminds me of the saying about family offices. If you've
• 24:16
  Speaker 2: seen one family office, you've seen one family office. Like
• 24:20
  Speaker 2: some family offices they're doing tax for their family, some
• 24:23
  Speaker 2: are doing just the investments, some are only doing the
• 24:25
  Speaker 2: private investments. Some are actually doing the private investments in house,
• 24:28
  Speaker 2: kind of creating their own venture capital fund versus buying others.
• 24:32
  Speaker 2: But most of them don't practice law, most of them
• 24:34
  Speaker 2: don't practice tax. They keep track of the real estate,
• 24:36
  Speaker 2: they handle some private investments. The capitol calls. Everybody's different.
• 24:40
  Speaker 2: You know, the line for us is concierge services. I mean,
• 24:43
  Speaker 2: that's a total nightmare. We remember talking to Oh my God,
• 24:48
  Speaker 2: like this walk my dog and I need to take
• 24:50
  Speaker 2: us to this show and whatever, to this restaurant. I mean,
• 24:53
  Speaker 2: that's like a full blown nightmare, right, And I have
• 24:56
  Speaker 2: yet to see anyone do it successfully. I've talked to
• 24:58
  Speaker 2: some outfits that do it for athletes, and everyone's disappointed
• 25:01
  Speaker 2: all the time. Right, I mean, it's it's a very
• 25:03
  Speaker 2: very difficult thing. That's not something I'm really interested in
• 25:06
  Speaker 2: doing for us. From the family office standpoint. We can
• 25:09
  Speaker 2: handle someone's real estate, we can handle their oil and gas,
• 25:12
  Speaker 2: we can handle their bill, pay for them all. We
• 25:15
  Speaker 2: can help them as consulting on their business, but we're
• 25:18
  Speaker 2: not going to like be walking the dog.
• 25:20
  Speaker 1: Right. The closest I ever get to that is people
• 25:24
  Speaker 1: know I'm a car guy. Every now and then someone
• 25:25
  Speaker 1: has a really interesting car. Hey, the dealer offered me
• 25:29
  Speaker 1: x on this. No, no, no, that's way too low.
• 25:31
  Speaker 1: So let's bring it to bring a trailer. We'll get
• 25:34
  Speaker 1: you fifty grand more than that. And I've helped people
• 25:37
  Speaker 1: actually sell cars that way and they've been thrilled that
• 25:41
  Speaker 1: they're not getting a low bull offer from somebody, especially
• 25:44
  Speaker 1: if it's something kind of interesting. But I don't want
• 25:47
  Speaker 1: to negotiate anybody's car leies for them, right, right, So
• 25:52
  Speaker 1: let's talk a little bit about some of the m
• 25:54
  Speaker 1: and a you've done, you've acquired. Is it more than
• 25:57
  Speaker 1: forty farms? Now?
• 25:58
  Speaker 2: Is that's right?
• 25:59
  Speaker 1: Right? Yes, we've talked a little bit about culture. Let
• 26:02
  Speaker 1: me ask the inverse question, what's the non negotiables when
• 26:07
  Speaker 1: it comes to acquisition? What is like, sorry, we're gonna
• 26:10
  Speaker 1: we're not gonna go beyond this line.
• 26:13
  Speaker 2: So you know, there's basically four investment bankers in our
• 26:16
  Speaker 2: space that control maybe eighty ninety percent of the deals
• 26:19
  Speaker 2: that are done, and I think they all know that.
• 26:22
  Speaker 2: You know, we'll start out with a zoom with another firm.
• 26:24
  Speaker 2: It will usually be short, and it will often end
• 26:27
  Speaker 2: short because there's not a connection. It's not gonna work.
• 26:30
  Speaker 2: What I have found is that the leader of the
• 26:33
  Speaker 2: firm usually is indicative of the whole firm, Like very
• 26:36
  Speaker 2: rarely do you meet a jerk, and then the firm
• 26:39
  Speaker 2: is a bunch of like wonderful people. Right, it's usually like,
• 26:43
  Speaker 2: really does emanate you know, from the leadership, And so
• 26:47
  Speaker 2: I am very focused on who these people are, what
• 26:49
  Speaker 2: is their attitude, how do they communicate, and all of
• 26:52
  Speaker 2: those things, and so I'm looking for some sort of
• 26:55
  Speaker 2: indication of servant leadership or collaboration, a consultative nature, kindness
• 27:00
  Speaker 2: you know about them. I think that's the type of
• 27:02
  Speaker 2: business where we're in, like that consultative business. It's very different.
• 27:06
  Speaker 2: Finances is very very broad, but there's hedge funds, mutual
• 27:09
  Speaker 2: funds estimated. Then they're dealing with people, right, So that's one,
• 27:12
  Speaker 2: very very big part of it. The other part is
• 27:15
  Speaker 2: they have to want to do what we do. Right,
• 27:16
  Speaker 2: We're not doing deals just to do deals. They have
• 27:18
  Speaker 2: to be planning, lad, they have to want to provide
• 27:20
  Speaker 2: all of these services to clients. They have to be
• 27:23
  Speaker 2: able to go that extra mile of Okay, now I'm
• 27:24
  Speaker 2: going to help you with your legal and now I'm
• 27:25
  Speaker 2: going to do this tax question. It's not just going
• 27:27
  Speaker 2: to be talking about investments. They have to adopt our
• 27:30
  Speaker 2: investment philosophy, right, So they've got to be following the
• 27:34
  Speaker 2: path that we believe is the absolute best way for
• 27:36
  Speaker 2: a high net worth investor to invest. So you do that,
• 27:38
  Speaker 2: that eliminates I mean ninety five percent, right, And so
• 27:41
  Speaker 2: for us, we're left with a very small group. But
• 27:44
  Speaker 2: I think that's why our acquisitions tend to be so successful,
• 27:47
  Speaker 2: is that small group we're left with. They really really
• 27:50
  Speaker 2: want to be at creative planning, and we really really
• 27:53
  Speaker 2: want them to be at creative planning. And when we
• 27:55
  Speaker 2: see a firm come in, we see their growth on
• 27:57
  Speaker 2: average grow two to three hundred percent more, ninety nine
• 28:01
  Speaker 2: hundred percent of their clients come over, their teams stay,
• 28:04
  Speaker 2: people are happy, and and it's a big win for everybody.
• 28:07
  Speaker 1: It certainly sounds like it. So the firm has been
• 28:09
  Speaker 1: a little more focused on creating content lately. That's something
• 28:13
  Speaker 1: I've noticed over the past couple of years. You have
• 28:15
  Speaker 1: a number of different employees posting, sending out market focused content.
• 28:20
  Speaker 1: Tell us a little bit about how that became part
• 28:22
  Speaker 1: of the firm's growth strategy and brand identity.
• 28:26
  Speaker 2: You know, well, there's this very inspiring guy, know that's
• 28:29
  Speaker 2: that's built this brand around.
• 28:31
  Speaker 1: Yeah, but I stumbled backwards into that. It was never
• 28:34
  Speaker 1: It began as just an itch. I had a scratch,
• 28:38
  Speaker 1: and then you know, multiplied.
• 28:40
  Speaker 2: From Yeah, you and Josh have been incredible. But you know,
• 28:42
  Speaker 2: I will say that for the longest time, I wrote
• 28:45
  Speaker 2: every single newsletter, right, and I enjoy writing, and maybe
• 28:48
  Speaker 2: did that for the first seventeen or eighteen years. A
• 28:51
  Speaker 2: lot of work eighteen years, but it's a lot of work,
• 28:53
  Speaker 2: and it's a lot of you. As you more and
• 28:57
  Speaker 2: more things occupy your attention as a CEO, you've got
• 28:59
  Speaker 2: to decide, well, what I don't want to do it
• 29:00
  Speaker 2: not do well. It turns out there's a lot of
• 29:02
  Speaker 2: people that are smarter than me, right at creative planning, right, or.
• 29:05
  Speaker 1: At least better writers.
• 29:06
  Speaker 2: I'm sure somebody. Yeah. So so basically I said, I'm
• 29:09
  Speaker 2: going to focus my attention on the books, which I
• 29:11
  Speaker 2: really like writing and like the one that just came out,
• 29:14
  Speaker 2: and then and the podcast So I've added more podcasts.
• 29:17
  Speaker 2: I do a podcast every month with my friend Jonathan Clements.
• 29:20
  Speaker 2: I do one every week with my friend Charlie Blello,
• 29:22
  Speaker 2: who he's unbelievable.
• 29:24
  Speaker 1: So Jonathan clements with the Wall Street Journal for decades.
• 29:27
  Speaker 1: That's right, great, great background. And Charlie Blello does some
• 29:31
  Speaker 1: great chart work. I see his stuff on.
• 29:33
  Speaker 2: Twitter, one of the kings of Twitter.
• 29:34
  Speaker 1: Yeah, let's talk about the most recent book, Money Simplified.
• 29:39
  Speaker 1: First of all, is Money all that complicated? Why does
• 29:42
  Speaker 1: it need to be simplified? And second, tell us what
• 29:45
  Speaker 1: else the book is about.
• 29:47
  Speaker 2: Well, I think it is incredible. I think it's more
• 29:48
  Speaker 2: complicated it needs to be. I think there are a
• 29:50
  Speaker 2: lot of people that don't understand it desperately want to
• 29:52
  Speaker 2: understand it better, and I think there are a lot
• 29:53
  Speaker 2: of people that are too embarrassed to admit they don't
• 29:56
  Speaker 2: understand it. And so I wanted to write a book
• 29:58
  Speaker 2: that basically, if you were teenager, you could pick it
• 30:00
  Speaker 2: up and you could grasp most of the concepts and
• 30:02
  Speaker 2: understand it. If you were a beginner, you have a
• 30:04
  Speaker 2: book that would really say, Okay, this is really going
• 30:06
  Speaker 2: to help me. And if you're a very sophisticated person,
• 30:09
  Speaker 2: but this just isn't your day job, that you could
• 30:11
  Speaker 2: get through this book in thirty minutes and go you
• 30:13
  Speaker 2: know what, I learned four or five things in here,
• 30:15
  Speaker 2: and so I basically took all what I thought were
• 30:18
  Speaker 2: the top like fifty sixty concepts of money and said,
• 30:21
  Speaker 2: I'm going to explain this as simple as possible and
• 30:24
  Speaker 2: with pictures you know as well. And it's it's been
• 30:27
  Speaker 2: well received. I've be happy with it.
• 30:29
  Speaker 1: Oh, that's great. Let's talk a little bit about the
• 30:32
  Speaker 1: RIA industry. You always seem to describe it as a
• 30:36
  Speaker 1: messy industry. Explain what you mean by that.
• 30:40
  Speaker 2: Oh, I think it's missing on so many different levels
• 30:41
  Speaker 2: because a lot of people you think broker or RIA,
• 30:44
  Speaker 2: so that all the independent advisors, their fiduciaries, all their
• 30:47
  Speaker 2: firms are pretty similar. The firms couldn't be any more different.
• 30:51
  Speaker 2: There are so many different offerings within the space, so
• 30:54
  Speaker 2: many different ways of delivering, and the lines have gotten
• 30:57
  Speaker 2: you know, very very muddied. And also now with so
• 31:00
  Speaker 2: much institutional money in the space, we see a lot
• 31:02
  Speaker 2: of you know, the frank and firm concepts has really
• 31:06
  Speaker 2: taken off in a big way too, so that you
• 31:07
  Speaker 2: see some of the biggest rias are really no different
• 31:10
  Speaker 2: than Morgan Stanley at this point. I mean, they have
• 31:13
  Speaker 2: their own products, they have their duly registered and they're
• 31:16
  Speaker 2: they're making money on commission. I mean literally to me,
• 31:18
  Speaker 2: it may as well be Morgan Stanley. They's there's no
• 31:21
  Speaker 2: difference from from what you experience. And then some arias
• 31:25
  Speaker 2: are just pure money managers, which is which is wonderful.
• 31:28
  Speaker 2: We need money managers. Some of them are wealth management
• 31:30
  Speaker 2: firms like Creative Planning, and some have multiple services, some don't.
• 31:35
  Speaker 2: Some are roll ups, some aren't. Some share their brands,
• 31:37
  Speaker 2: some don't. It's it's very very messy as when you
• 31:41
  Speaker 2: come into the space, you really have to spend some
• 31:43
  Speaker 2: time if you're a client perspective client really trying to
• 31:46
  Speaker 2: understand what you're looking for and who fits your needs.
• 31:49
  Speaker 2: And if you're a firm and you're looking to sell,
• 31:51
  Speaker 2: I mean when you look at the main buyers, most
• 31:55
  Speaker 2: of them could not be any more different in their offering.
• 31:58
  Speaker 1: So you mentioned the phrase Frank is firm. I know
• 32:01
  Speaker 1: exactly what you mean, but why don't you define what
• 32:04
  Speaker 1: that is to the layperson who may not be so
• 32:07
  Speaker 1: familiar with that phrase.
• 32:08
  Speaker 2: Yeah, So to me, a Frank and firm is just
• 32:10
  Speaker 2: you know, you look, I look at Creative Planning. We
• 32:12
  Speaker 2: spent fifteen years building something from scratch, right, so we
• 32:15
  Speaker 2: built a very strong tree trunk. We knew what kind
• 32:18
  Speaker 2: of tree it was, right, had branches, and then when
• 32:21
  Speaker 2: we made acquisitions, we put branches on the tree that
• 32:24
  Speaker 2: fit the tree right, and the people that were coming
• 32:26
  Speaker 2: knew where they fit on that tree, and we knew
• 32:28
  Speaker 2: where they fit on that tree. But most of the
• 32:31
  Speaker 2: large RaaS are really all acquisitions, right, from a very
• 32:35
  Speaker 2: small they're very small firms, they started to acquisitions. So
• 32:38
  Speaker 2: if you go to their fifty offices across the country,
• 32:41
  Speaker 2: all fifty of them were acquisitions. So what do you get?
• 32:44
  Speaker 2: You get fifty different leaders with fifty different ways of
• 32:46
  Speaker 2: doing things, fifty different cultures, sometimes even different money management approaches.
• 32:51
  Speaker 2: It's an absolute mess, you know what I mean. I
• 32:53
  Speaker 2: think because the industry has grown so much and so
• 32:56
  Speaker 2: many people have made so much money in this industry
• 32:58
  Speaker 2: that hasn't really been punished yet. But you know, in
• 33:01
  Speaker 2: what industries it's punished eventually, all of them, right, Eventually,
• 33:06
  Speaker 2: Eventually the Franken firms don't work out. Eventually the arms
• 33:09
  Speaker 2: come falling off and the legs come falling off, and
• 33:12
  Speaker 2: you just can't fix them when they get too big.
• 33:14
  Speaker 1: So let's talk about the genesis of that. Back in
• 33:17
  Speaker 1: the twenty tens, not that far ago, in time when
• 33:22
  Speaker 1: the ten year was yielding one and a half percent,
• 33:26
  Speaker 1: when there was just no yield on any sort of
• 33:28
  Speaker 1: fixed income rias were thrown off seven nine twelve percent
• 33:33
  Speaker 1: a year. Three four times a week, I would get
• 33:36
  Speaker 1: a phone call from some private equity shop. Hey, listen,
• 33:39
  Speaker 1: we want to take a chunky We're looking to buy
• 33:41
  Speaker 1: ten percent, We're looking to buy twenty percent. What's your
• 33:43
  Speaker 1: profit margin? We see your growth how much? And we're like,
• 33:46
  Speaker 1: we're still really growing. We're not looking to sell anything yet,
• 33:49
  Speaker 1: but call back in ten years, right. And I wonder,
• 33:53
  Speaker 1: given the fact that we had zero interest rates for
• 33:55
  Speaker 1: so long, I wonder how much those circumstances and all
• 34:00
  Speaker 1: the private equity cash sloshing around led to the rise
• 34:04
  Speaker 1: of all these francin firms.
• 34:05
  Speaker 2: Well, I think that's part of it, but I think
• 34:07
  Speaker 2: it's way beyond that. It's a perfect storm of factors
• 34:10
  Speaker 2: that really benefited the ra space. So number one, private
• 34:13
  Speaker 2: equity likes to go where money is moving, right, and
• 34:16
  Speaker 2: we've got money going from brokers to independence.
• 34:18
  Speaker 1: I mean that's been going off of fifteen to twenty years, and.
• 34:21
  Speaker 2: They love massive trends. Right, Hey, this is happening, It's
• 34:23
  Speaker 2: going to continue to happen. This is a big thing
• 34:25
  Speaker 2: in my favor. I can make a lot of mistakes
• 34:27
  Speaker 2: in this will work out. You've actually seen that payoff
• 34:30
  Speaker 2: with some private equity firms is they've made some of
• 34:32
  Speaker 2: them made monumental mistakes. But even bad RaaS have done
• 34:36
  Speaker 2: well because of that mega trend. The second mega trend
• 34:40
  Speaker 2: is the transfer of wealth, the massive amount of wealth
• 34:43
  Speaker 2: you know that's moving hands. Now that's also betting been
• 34:47
  Speaker 2: helping the RA space. A third trend is worth seeing
• 34:50
  Speaker 2: consolidation in the space. So they like to be in
• 34:52
  Speaker 2: the early innings of consolidation of every single industry. If
• 34:57
  Speaker 2: you've got dentists consolidating, or HVAC company can sell. You know,
• 35:00
  Speaker 2: if you've got one little company, it's worth you certain
• 35:03
  Speaker 2: multiple of earnings, but if it's ten of those put together,
• 35:05
  Speaker 2: it's worth more because the earnings are more diversified, they're
• 35:07
  Speaker 2: more reliable. You only need one CFO, one hr person
• 35:11
  Speaker 2: all that stuff. So the RA space is highly fragmented,
• 35:14
  Speaker 2: so they see a future if you look at the
• 35:16
  Speaker 2: custodians it's not highly fragmented. There's two and a few others.
• 35:19
  Speaker 2: Investment banks there's two and a few others. Brokerage houses
• 35:22
  Speaker 2: there's a few, and then no one else. Right, they
• 35:24
  Speaker 2: see the RA space is going to go through massive consolidation,
• 35:27
  Speaker 2: and they're right, and we're seeing that now. And then
• 35:30
  Speaker 2: you also see this massive trend of money moving from
• 35:33
  Speaker 2: smaller RaaS to the multi billion dollar ras. People going, look,
• 35:35
  Speaker 2: I want to feel safe. So all of these trends
• 35:38
  Speaker 2: are mega trends. On top of that, you put private
• 35:41
  Speaker 2: equity loves recurring revenue, right, I'd rather buy Netflix and
• 35:44
  Speaker 2: Apple where people are paying every month. And the money
• 35:46
  Speaker 2: management business is a recurring revenue business, and every aspect
• 35:49
  Speaker 2: of it is we do taxes, that's recurring revenue. You
• 35:51
  Speaker 2: have to file your taxes every year. We do bill
• 35:53
  Speaker 2: pay that's recurring revenue if you pay bills every year.
• 35:55
  Speaker 2: So they love that recurring revenue business. And then there's
• 35:58
  Speaker 2: an inflation hedge right built in just magically. So you
• 36:02
  Speaker 2: have all of these incredible trends that, look, you and
• 36:05
  Speaker 2: I were not thinking about at all when we started, right,
• 36:08
  Speaker 2: I was just saying, hey, how do I do this
• 36:10
  Speaker 2: in a better way tell clients. It was probably a
• 36:13
  Speaker 2: good maybe twelve thirteen years before I got a call
• 36:16
  Speaker 2: from anybody it even knew I had anything with any
• 36:19
  Speaker 2: enterprise value whatsoever. I just thought, Hey, this is a
• 36:23
  Speaker 2: great way to make, you know, make a living. I
• 36:24
  Speaker 2: love what I'm doing all day. I've created this thing
• 36:26
  Speaker 2: that seems to be going over very well. But PE
• 36:29
  Speaker 2: has really flooded this space, particularly in the last seven
• 36:33
  Speaker 2: or eight years, and they've been right.
• 36:36
  Speaker 1: So I wanted to come back to PE in a minute.
• 36:38
  Speaker 1: But before we do that, let's talk about the solo
• 36:42
  Speaker 1: practitioners or the small two, three, four, five person shop.
• 36:46
  Speaker 1: You know, even with the wave of consolidation we saw
• 36:49
  Speaker 1: in the twenty tens, there's still tens of thousands of
• 36:53
  Speaker 1: small shops. I've heard some folks say they're all going away.
• 36:58
  Speaker 1: That seems a little extreme. I've heard other people say
• 37:01
  Speaker 1: this space is ripe for consolidation, mergers, acquisitions, et cetera.
• 37:06
  Speaker 1: How do you see the either the small firm or
• 37:09
  Speaker 1: the solo practitioner over the next decade.
• 37:11
  Speaker 2: Well, I think there are some people in our in
• 37:13
  Speaker 2: our space that love to say that everyone's going to
• 37:16
  Speaker 2: get crushed and go away. And it's very self surveying.
• 37:18
  Speaker 1: Send us your mind, Yeah, exactly, come to us.
• 37:22
  Speaker 2: That's right. If you don't sell to us or hire
• 37:24
  Speaker 2: me as you're a consultant or whatever, you're gonna die.
• 37:26
  Speaker 2: That's ridiculous. There's room. You're gonna have to be better though, right,
• 37:31
  Speaker 2: Like I think that, like you know, ten years ago,
• 37:33
  Speaker 2: anybody could open a shop and do whatever. That world
• 37:36
  Speaker 2: is going away, right, So I think what we're going
• 37:38
  Speaker 2: to have is you're going to have my best guess
• 37:42
  Speaker 2: on how this turns Out's like the tax world. Right,
• 37:44
  Speaker 2: You're going to have one to four mega mega firms,
• 37:47
  Speaker 2: you'll have ten to twenty regional firms. You'll have a
• 37:51
  Speaker 2: thousand smaller firms that either specialize in equestrian wealth management
• 37:56
  Speaker 2: or dental wealth management, or they cost less than others,
• 38:00
  Speaker 2: or it's a very very premium service, or you're just
• 38:03
  Speaker 2: really really personable person and you're able to maintain a
• 38:06
  Speaker 2: practice that way. But it will be harder, and I
• 38:09
  Speaker 2: think that it's going to be harder and harder to
• 38:11
  Speaker 2: compete with the firm that's lowering their fees, providing more services,
• 38:15
  Speaker 2: has access to investments that maybe you can't get, maybe
• 38:17
  Speaker 2: can negotiate something with a third party, you can't negotiate,
• 38:20
  Speaker 2: but there will be a home. It's just that the
• 38:23
  Speaker 2: bar is going to rise, just as with bigger firms.
• 38:25
  Speaker 2: For those big firms to thrive, the bar is going
• 38:28
  Speaker 2: to have to be higher. It's not going to just
• 38:30
  Speaker 2: be as simple as buy a bunch of firms in
• 38:32
  Speaker 2: the market goes up. I think that world's coming to
• 38:34
  Speaker 2: an end too.
• 38:35
  Speaker 1: Really interesting. So you made the decision to work with
• 38:38
  Speaker 1: a private equity shop to help fuel your acquisitions. Tell
• 38:43
  Speaker 1: us a little bit about what that experience was.
• 38:45
  Speaker 2: Well, I mean, for us, we've never so General Atlantic
• 38:48
  Speaker 2: is our minority owner. They own about seventeen percent of
• 38:51
  Speaker 2: Creative Planning. They've been wonderful partners, but we've never used
• 38:53
  Speaker 2: any money from them to do an acquisition. And the
• 38:55
  Speaker 2: reality is, you know, we're the fastest growing area in
• 38:58
  Speaker 2: the country, one of the large just ras in the country,
• 39:01
  Speaker 2: and you know, that's a lot of eggs in one
• 39:03
  Speaker 2: person's basket. So the decision was basically made, Hey, we
• 39:06
  Speaker 2: need to institutionalize this place and we need to reward
• 39:09
  Speaker 2: the people that have come along on this journey. And
• 39:11
  Speaker 2: so we brought in about five hundred employees are now
• 39:14
  Speaker 2: partners and that's.
• 39:14
  Speaker 1: Oh really, I remember the last time you and I
• 39:17
  Speaker 1: sat down, you were literally one hundred percent owner.
• 39:21
  Speaker 2: That's right.
• 39:21
  Speaker 1: There was no outside investment, that's right, No employees. You're
• 39:24
  Speaker 1: morphing into something a little more employee owned.
• 39:27
  Speaker 2: Yes, five hundred, yea five hundred and many of them
• 39:30
  Speaker 2: very very substantively. And then and then you've got General
• 39:33
  Speaker 2: Anak in there. And then we brought in an institutional
• 39:36
  Speaker 2: level CFO. We brought in Ernst and Young and and
• 39:39
  Speaker 2: KPMG wanted to do our audit, wanted to do our tech.
• 39:41
  Speaker 2: Basically just said, hey, look, we wanted the regulators to see, Look,
• 39:45
  Speaker 2: we're taking this very seriously. We want our clients to
• 39:47
  Speaker 2: see we're taking this very seriously. We were doing acquisitions.
• 39:50
  Speaker 2: We want somebody we're acquiring to see that as well.
• 39:53
  Speaker 2: And it allowed for more easier internal succession in the
• 39:56
  Speaker 2: event that something happens to me. And so there was
• 39:58
  Speaker 2: was not motivated at all by using the capital at
• 40:02
  Speaker 2: a third party to do anything, because they've never given
• 40:04
  Speaker 2: us a dollar to do anything. They just bought into
• 40:06
  Speaker 2: the company and that was it.
• 40:08
  Speaker 1: Any So it sounds like when you bring in an
• 40:10
  Speaker 1: ian yan a KPMG that often is a predecessor step
• 40:15
  Speaker 1: to going public. I don't get the sense that's the
• 40:18
  Speaker 1: top of your list to become publicly traded.
• 40:21
  Speaker 2: No, it's not. I think that when you went in
• 40:23
  Speaker 2: our scale, when we're negotiating with third parties to bring
• 40:27
  Speaker 2: an investment to a client or to get something for
• 40:29
  Speaker 2: a client, you know, sometimes the partner wants to see
• 40:33
  Speaker 2: some information and that information coming from one of the
• 40:37
  Speaker 2: Big four is a much bigger deal than if it's
• 40:39
  Speaker 2: coming for like my buddy across town that does my taxes,
• 40:42
  Speaker 2: do you know what I mean? So that's really you know,
• 40:45
  Speaker 2: institutionalizing so many things made it easier to do a
• 40:49
  Speaker 2: lot of things, give a lot of people a lot
• 40:51
  Speaker 2: of comfort, and that was a very very good decision.
• 40:53
  Speaker 2: I have a lot of clients that I personally work
• 40:56
  Speaker 2: with that are CEOs or CFOs of publicly traded company
• 41:00
  Speaker 2: and I will never do that. I mean, if I
• 41:03
  Speaker 2: if we had to go public, you know, for the
• 41:04
  Speaker 2: best interest of our partners and whatever, we had to
• 41:06
  Speaker 2: go public, I mean, I would do what I had
• 41:08
  Speaker 2: to do, but I would not be in that seat
• 41:10
  Speaker 2: for you know, ten years. I wouldn't be able to
• 41:12
  Speaker 2: do it pick chairman to a sacrifice.
• 41:17
  Speaker 1: Yeah, I could certainly see that being a challenge. So
• 41:21
  Speaker 1: given where you are today, what are you looking at
• 41:24
  Speaker 1: as the next leg of growth for creative planning?
• 41:27
  Speaker 2: Well, I think today like we are very strong with
• 41:30
  Speaker 2: the very wealthy and with the mass affluent. We've got
• 41:33
  Speaker 2: an emerging wealth division. We're strong in the phone case space,
• 41:35
  Speaker 2: and we're strong with business owners. We're working towards getting
• 41:38
  Speaker 2: stronger in the foundation uh space. And I think for
• 41:42
  Speaker 2: us now, it's a question of just getting bigger locally,
• 41:46
  Speaker 2: like where most of the places in the United States
• 41:48
  Speaker 2: where you see a major sports team will have an office.
• 41:51
  Speaker 2: But we're still relatively small. I mean, the reality is
• 41:54
  Speaker 2: we're small, So we only sound big when you compare
• 41:57
  Speaker 2: us to RAS. But the brokerage houses you know, Morgan
• 42:01
  Speaker 2: and Merrill and the investment ult Trillion Goldman, JP Morgan,
• 42:04
  Speaker 2: the Custodian Schwabatfela, these are trillions and trillionah, They're all
• 42:07
  Speaker 2: two to twelve billion, trillion trillion with a T right,
• 42:11
  Speaker 2: So we are a tiny, tiny fraction of that. We
• 42:14
  Speaker 2: employ the same number of people as the high school
• 42:16
  Speaker 2: close to my office, right, So in the ria space.
• 42:19
  Speaker 2: It's significant, but it's not significant enough for the average
• 42:23
  Speaker 2: American to know who creative planning is. And I think
• 42:25
  Speaker 2: that's our objective is we want to be the gold
• 42:27
  Speaker 2: standard nationally for the mass affluent and ultrafluent clients looking
• 42:31
  Speaker 2: for an independent wealth manager.
• 42:33
  Speaker 1: So you rather famously you're known for not going to conferences.
• 42:37
  Speaker 1: I have to ask, why is that? I really had
• 42:41
  Speaker 1: to twist your arm to get you to go to
• 42:44
  Speaker 1: the conference we did back in twenty nineteen. And I
• 42:47
  Speaker 1: know you're coming to future Proof twenty twenty four in
• 42:51
  Speaker 1: Huntington Beach in September, But why are you so down
• 42:56
  Speaker 1: on conferences generally?
• 42:58
  Speaker 2: So I've really I kind of got this repeat from
• 43:01
  Speaker 2: I can't maybe as Investment News or somebody did a
• 43:04
  Speaker 2: story about this and they were asking competitors about me,
• 43:07
  Speaker 2: and it was it was kind of like, well, they
• 43:09
  Speaker 2: didn't say Peter is a jerk, it was, but it
• 43:11
  Speaker 2: came across like, well, Peter's just like too big of
• 43:13
  Speaker 2: a jerk to go to these conferences or something like that.
• 43:16
  Speaker 2: But really, the I learned very early on from my clients.
• 43:19
  Speaker 2: I learned so much from my clients that you know,
• 43:21
  Speaker 2: a yes to something is a note of something else. Right,
• 43:24
  Speaker 2: So when you're committing to a conference, you're you're not
• 43:27
  Speaker 2: usually committing like two days in advance, right, you're committing
• 43:30
  Speaker 2: six months in advance. Right, That's right, And that's a
• 43:33
  Speaker 2: big deal if you if you have kids, like I
• 43:35
  Speaker 2: don't like to commit to things that are far in
• 43:37
  Speaker 2: the future that I cannot move, right, And so I
• 43:41
  Speaker 2: made that. That's part one of the decisions. The other
• 43:43
  Speaker 2: part of the decision is I think and look, I
• 43:45
  Speaker 2: know you put on conferences. Yours are wonderful. Most of
• 43:48
  Speaker 2: them suck, you know what I mean, Like most of
• 43:50
  Speaker 2: the time you're going and everyone just really wants to
• 43:53
  Speaker 2: get away from home and drink and hang out and
• 43:55
  Speaker 2: go for a hike or go golfing or whatever. And
• 43:57
  Speaker 2: I look at that, like two days or three days
• 43:59
  Speaker 2: or four day and go, Man if I spent that
• 44:02
  Speaker 2: twenty or thirty hours, uh, you know at night with
• 44:05
  Speaker 2: my family and during the day with actual clients and
• 44:09
  Speaker 2: employees one on one, where am I going to get
• 44:11
  Speaker 2: more value? I'm going to learn more, not not just
• 44:13
  Speaker 2: serve people more. I'm going to learn more being present.
• 44:15
  Speaker 2: So I have that attitude too. Now my youngest start
• 44:18
  Speaker 2: graduating from high school. So I'm you know, I think
• 44:20
  Speaker 2: the last what I agreed to do, I think was
• 44:22
  Speaker 2: with you five years ago. That's right, And the next
• 44:24
  Speaker 2: thing I'm about to do is with your colleague Josh here,
• 44:27
  Speaker 2: with with.
• 44:27
  Speaker 1: Your with your right. The fun part about that, the
• 44:31
  Speaker 1: whole thing is out doing Yeah, no, that looks that
• 44:33
  Speaker 1: looks cool.
• 44:33
  Speaker 2: And you have I mean, that's the lineup of all
• 44:35
  Speaker 2: lineups right that you have. So that's going to be
• 44:37
  Speaker 2: very very interesting one and it's obviously a very different
• 44:40
  Speaker 2: spin than everybody else. But I also know, you know,
• 44:42
  Speaker 2: my kids aren't going to be home, right, so it's
• 44:44
  Speaker 2: a much easier, easier thing to do for a couple
• 44:46
  Speaker 2: of days.
• 44:47
  Speaker 1: So the secret is to plan conferences when Peter's children
• 44:52
  Speaker 1: are otherwise occupied. Otherwise you get no shot. We did
• 44:55
  Speaker 1: that very much on purpose, So I know I only
• 44:58
  Speaker 1: have you for so much time. Before I get to
• 45:01
  Speaker 1: my favorite questions I ask all my guests, I have
• 45:04
  Speaker 1: to throw you a curveball question. You're a minority owner
• 45:09
  Speaker 1: of the Kansas City Royals. I have to ask how
• 45:12
  Speaker 1: that came about, because I know your background with them.
• 45:16
  Speaker 1: How did you end up as a minority owner of
• 45:18
  Speaker 1: a Major League Baseball team.
• 45:20
  Speaker 2: I mean this sounds cliche, but I mean when I
• 45:21
  Speaker 2: was a little kid, I would literally listen to them
• 45:23
  Speaker 2: to the radio while I was falling asleep. They used
• 45:25
  Speaker 2: to start at seven thirty five PM all the time.
• 45:27
  Speaker 2: There was none of this three o'clock game and weekdays
• 45:29
  Speaker 2: or six o'clock GA. It was seven thirty five and
• 45:32
  Speaker 2: they played till usually eleven. The games were really long.
• 45:35
  Speaker 2: I'd listen to them every night. The Royals were amazing
• 45:37
  Speaker 2: back then, George Brett, Frank White, Willie Wilson playing the
• 45:40
  Speaker 2: Yankees every year in the playoffs. Huge, huge, huge fan.
• 45:43
  Speaker 2: And then in high school I wound up I talk
• 45:48
  Speaker 2: to my dad and taking me out there to interview
• 45:49
  Speaker 2: for a job. And I was interviewing. They're like, what
• 45:51
  Speaker 2: do you want to do. I'm like, I want to
• 45:52
  Speaker 2: be a bat boy for the Royals. I think I
• 45:54
  Speaker 2: just started laughing, right. He's like, no, I thought You're interviewing,
• 45:56
  Speaker 2: like do you want to sell peanuts or do you
• 45:57
  Speaker 2: want to sell you know, strawberries? But what are you
• 45:59
  Speaker 2: going to the aisles and sell? It's like I don't
• 46:01
  Speaker 2: want to do that. We're walking out and the guy
• 46:03
  Speaker 2: yells he goes, Hey, I call the clubhouse and they
• 46:05
  Speaker 2: have an opening for a clubby. I didn't know what
• 46:07
  Speaker 2: a clubb he was. But the club he's the guys,
• 46:09
  Speaker 2: like what cleans the shines the shoes for the players,
• 46:11
  Speaker 2: does their lot. There's this whole route.
• 46:13
  Speaker 1: You literally do their laundry.
• 46:14
  Speaker 2: Yeah, literally do it. It's this is fascinating.
• 46:16
  Speaker 1: I delivered fried chicken at City Royal players. Was out
• 46:21
  Speaker 1: during a game sitting on the bench.
• 46:23
  Speaker 2: That was That was Wade Bogs. That was the way
• 46:24
  Speaker 2: Bogs they did that for but they Bruce It was.
• 46:27
  Speaker 2: It's crazy and so but I was upset because the
• 46:30
  Speaker 2: clubby job wasn't for the Royals, it was for the
• 46:32
  Speaker 2: visiting clubhouse, and I was upset about that. But then
• 46:34
  Speaker 2: I took the job, and it turns out you get
• 46:36
  Speaker 2: to know all the Royals. Plus you get to meet
• 46:37
  Speaker 2: all the players in the American League because you're playing
• 46:40
  Speaker 2: every team in the American League and you were getting
• 46:41
  Speaker 2: tipped every series. So I was making a fortune, I
• 46:44
  Speaker 2: mean a fortunate it's getting all these autographs, got to
• 46:47
  Speaker 2: know all these players. But the routine before the game
• 46:49
  Speaker 2: is nuts. I mean, they show up way earlier than
• 46:51
  Speaker 2: most people. Think and hours hours hours ahead of time,
• 46:54
  Speaker 2: and then they go and they you know, head and
• 46:57
  Speaker 2: field or whatever. Then they come in and they they
• 46:59
  Speaker 2: drop all their law on the floor and they change
• 47:01
  Speaker 2: their their cleats and then they get into their new
• 47:04
  Speaker 2: you know, jerseys and new cleats, and then they go
• 47:06
  Speaker 2: out and play the game, and you're shining their old
• 47:08
  Speaker 2: cleats and washing their old jerseys, and then you're getting
• 47:12
  Speaker 2: their lockers organized. Then you've got like the third eighty
• 47:15
  Speaker 2: of the sixth inning to walk around the stadium. Then
• 47:16
  Speaker 2: you're going and getting dinner ready for them and their beers.
• 47:19
  Speaker 2: Then after the game they all drink and eat and
• 47:21
  Speaker 2: take their showers, do their interviews, and then they leave,
• 47:23
  Speaker 2: and then you wash their clothes and shine their shoes,
• 47:25
  Speaker 2: and organize their lockers and put the food away and
• 47:28
  Speaker 2: drive the ones home that were you know, hammered and
• 47:30
  Speaker 2: stayed late, and you take them to the Adams Mark
• 47:32
  Speaker 2: Hotel across the streets. So when the Royals came for sale,
• 47:35
  Speaker 2: they were putting together a conglomerate in Kansas City. And
• 47:37
  Speaker 2: I remember when John Sherman, who's the primary owner, he's
• 47:41
  Speaker 2: the greatest guy, and he's like giving a walk you
• 47:43
  Speaker 2: through I'm like, John, I don't need you to walk
• 47:45
  Speaker 2: me through this deck, and he's like, I'm gonna walk you.
• 47:47
  Speaker 2: I'm like, I'm one hundred percent in, Like I'm just
• 47:50
  Speaker 2: Kansas City through and through, Royals through and through, and
• 47:53
  Speaker 2: I just it was like a not even a thought
• 47:55
  Speaker 2: about it.
• 47:56
  Speaker 1: All right, So let's jump to our favorite questions that
• 47:58
  Speaker 1: we ask all our guests. Yeah, except I'm going to
• 48:00
  Speaker 1: modify this because I know some things about you and
• 48:04
  Speaker 1: two of these questions won't work for you. But let's
• 48:08
  Speaker 1: start with who are your mentors who helped shape your career?
• 48:11
  Speaker 2: You know my mentors aren't you know, famous people. I
• 48:15
  Speaker 2: really just early on got to work with somebody who
• 48:18
  Speaker 2: has just had the most positive attitude in the world,
• 48:21
  Speaker 2: and he was just so gracious with everybody around him.
• 48:23
  Speaker 2: And I saw the impact that that had on everybody
• 48:27
  Speaker 2: around him all the time, you know, with his with
• 48:29
  Speaker 2: his family, as friends, his colleagues at work, and it
• 48:31
  Speaker 2: really showed me, you know, how important that piece is
• 48:35
  Speaker 2: to the puzzle. He was not brilliant from a finance perspective,
• 48:39
  Speaker 2: and I also worked with someone who was brilliant from
• 48:41
  Speaker 2: a finance perspective but was not positive with the people
• 48:44
  Speaker 2: around him, and the combination of the two was really
• 48:47
  Speaker 2: the ultimate, you know, lesson. And I just combined that
• 48:51
  Speaker 2: with my parents kind of that classic immigrant you know,
• 48:54
  Speaker 2: work like crazy, love everything about your country all the time,
• 48:58
  Speaker 2: no matter what I think, just that the positive attitude
• 49:01
  Speaker 2: my parents. Every wedding they left was always the best
• 49:04
  Speaker 2: wedding they'd ever been to, right. And so I remember,
• 49:06
  Speaker 2: right a girlfriend in college who were driving home and
• 49:09
  Speaker 2: her parents were like making fun of something from some
• 49:11
  Speaker 2: wedding we were out of. I've never heard anything like it,
• 49:14
  Speaker 2: but that's like, turns out that's kind of normal, right,
• 49:16
  Speaker 2: But just being around people that were so positive and
• 49:19
  Speaker 2: so negative, so hyper both as the spectrum. I think
• 49:21
  Speaker 2: that was probably the biggest lesson for me. I don't
• 49:23
  Speaker 2: think people need to have People always think they have
• 49:25
  Speaker 2: to have a mentor. That's like I get calls all
• 49:27
  Speaker 2: the time, well like you mentor me, Like, and I go,
• 49:30
  Speaker 2: what does that mean?
• 49:31
  Speaker 1: Oh?
• 49:31
  Speaker 2: Well get a lunch every month? And you know you
• 49:32
  Speaker 2: can't do that with everybody, right, right, But in the
• 49:35
  Speaker 2: world you're we're in today, I mean a mentor could
• 49:38
  Speaker 2: be on Twitter, do.
• 49:39
  Speaker 1: You mean right? Oh, you can absolutely have remote mens
• 49:42
  Speaker 1: they don't have to they don't even have to know
• 49:44
  Speaker 1: they're mentoring.
• 49:44
  Speaker 2: That's exactly correct, that's correctly.
• 49:47
  Speaker 1: And I've heard some stories about people who have said
• 49:49
  Speaker 1: some people on the show have said, well, these three
• 49:52
  Speaker 1: people have been my mentors. They have no idea about it, right,
• 49:54
  Speaker 1: and it's really really interesting. So normally I would ask
• 49:58
  Speaker 1: you what's keeping you into taine, what are you reading,
• 50:00
  Speaker 1: what are you streaming? But with you, I want to
• 50:03
  Speaker 1: ask tell me about the music shows you've been going to.
• 50:06
  Speaker 1: What have you been doing in your evenings in your
• 50:09
  Speaker 1: spare time.
• 50:10
  Speaker 2: So following you on Twitter, I know you're a big
• 50:12
  Speaker 2: concert guy. It seems like your genre is like seventies
• 50:15
  Speaker 2: is that pretty?
• 50:16
  Speaker 1: So I have really broad taste. It's the great Sarah
• 50:19
  Speaker 1: McLaughlan too, like yeah, yeah, so so wow you really Yeah.
• 50:23
  Speaker 1: So it's the Great American Songbook and everybody from El
• 50:26
  Speaker 1: Fitzgerald to Frank Sinatra to classic rock to eighties and
• 50:30
  Speaker 1: nineties to jazz to classical to blues, like even hip
• 50:35
  Speaker 1: hop up until like my line in the sand is
• 50:39
  Speaker 1: the Beastie Boys pull polls boutique. That's kind of where
• 50:42
  Speaker 1: I stopped. But but I'll listen.
• 50:45
  Speaker 2: To Pope three years or something like that.
• 50:48
  Speaker 1: I'll listen to pop, I'll listen to Taylor Swift, any
• 50:51
  Speaker 1: of the big singers. Yeah, what's your musical genre?
• 50:54
  Speaker 2: So it's been great having you know. So I used
• 50:57
  Speaker 2: to own music stores in college, and I used to
• 50:59
  Speaker 2: DJ even after college, weddings, everything else. And one of
• 51:03
  Speaker 2: the things you do in a music story till the
• 51:04
  Speaker 2: times you would just play every album that ever came in, right,
• 51:07
  Speaker 2: So it became a very expansive list of things I
• 51:10
  Speaker 2: would be willing to go to. And really, really the
• 51:12
  Speaker 2: only genre I was not a big fan of that
• 51:13
  Speaker 2: was major was country, but my kids have changed that
• 51:15
  Speaker 2: for me. So now I've been to Luke Cobs and
• 51:17
  Speaker 2: Morgan Wallen, which would say we're the best concerts.
• 51:20
  Speaker 1: But those are very news.
• 51:22
  Speaker 2: That's not like that, not Hank Williams, right, right.
• 51:26
  Speaker 1: Very interesting. It's like country rock.
• 51:28
  Speaker 2: Right, David Allen Cob was pretty cool. But I mean
• 51:30
  Speaker 2: most of the old old stuff is not is not
• 51:32
  Speaker 2: for me, you.
• 51:33
  Speaker 1: Like, So when I think of Lennard Skinner to Woman
• 51:36
  Speaker 1: Brothers or Marshall Tucker, those are old rock with the country. Well,
• 51:42
  Speaker 1: you're describing his country with a rock influence correct, Yes,
• 51:46
  Speaker 1: very yeah, I mean I could correct genre.
• 51:49
  Speaker 2: That's right. I used. I've used my daughter as a
• 51:51
  Speaker 2: cover to go to the every Taylor swift concert that
• 51:53
  Speaker 2: she's you have. Yeah.
• 51:54
  Speaker 1: So my favorite thing I saw on Twitter last week
• 51:58
  Speaker 1: was and he told the story Home Breaks the Allans.
• 52:00
  Speaker 1: The other day, Mohammed Alarian got all the women and
• 52:05
  Speaker 1: the Swifties and his family in Paris to go see
• 52:08
  Speaker 1: a show. And it was his wife, his daughters and
• 52:12
  Speaker 1: a bunch of their friends. And the last minute, he said,
• 52:15
  Speaker 1: somebody canceled, so he puts on a pink Sure, and
• 52:19
  Speaker 1: he goes and somebody recognized him, took a photo of
• 52:24
  Speaker 1: and it went a little viral.
• 52:25
  Speaker 2: I saw that, Actually, hilario, that is hilarious.
• 52:28
  Speaker 1: How many? How many? I would never have picked you
• 52:30
  Speaker 1: for a Swiftie. Although I find her music fun and interesting.
• 52:34
  Speaker 2: Well, I think I think she's she's got to be
• 52:37
  Speaker 2: the best all around artist of this generation.
• 52:40
  Speaker 1: Sure.
• 52:40
  Speaker 2: And the first time I went and saw my daughter
• 52:43
  Speaker 2: was very very young, and it was her first tour,
• 52:46
  Speaker 2: and I remember that I was like, Oh, there's this
• 52:47
  Speaker 2: guy of guitar. He seems pretty interesting. That's opening. You know,
• 52:49
  Speaker 2: no one was paying attention, right, and it was edgeering,
• 52:52
  Speaker 2: it was was hilarious. Yeah, so, and so I got
• 52:55
  Speaker 2: to see that and then I'm you know, you get
• 52:57
  Speaker 2: a little nostalgic as you get older, so you start
• 52:59
  Speaker 2: going to com or she wouldn't even go to when
• 53:01
  Speaker 2: these bands were around. Absolutely, So I'm doing that all
• 53:04
  Speaker 2: the time too, Like Sarah Maclachlin's on my coundar the bleachers,
• 53:08
  Speaker 2: who are they rolled out of fun? I know the
• 53:10
  Speaker 2: bleacher you know. I'll go see Lionel Richie soon. Gotta
• 53:14
  Speaker 2: go see Bruce Springsteen again.
• 53:16
  Speaker 1: Right, So are you gonna catch the Rolling Stones on
• 53:18
  Speaker 1: this tour?
• 53:19
  Speaker 2: You know, I'm not a Rolling Stones.
• 53:21
  Speaker 1: I'm a Giant fan and I just don't want to
• 53:23
  Speaker 1: go to Giant state.
• 53:23
  Speaker 2: Oh I'd like to see them play Sympathy for the
• 53:26
  Speaker 2: Devil and then go home.
• 53:28
  Speaker 1: I saw them in Atlantic City on the Steel Wheels tour.
• 53:31
  Speaker 1: It's like an eight thousand seat hall and it was
• 53:33
  Speaker 1: it was awesome. But the bands that you might not
• 53:36
  Speaker 1: have seen. I have this discussion with people all the time.
• 53:41
  Speaker 1: Never hole an Oates fan. Yeah, we saw John Oates
• 53:45
  Speaker 1: in like a time, like a four hundred seat room.
• 53:49
  Speaker 1: He's like people who can fill stadiums. They are entertainers
• 53:53
  Speaker 1: and they know how to entertain and you're getting a
• 53:56
  Speaker 1: stadium show with five hundred people.
• 53:58
  Speaker 2: That's pretty awesome.
• 54:00
  Speaker 1: You know. We see Ricky Lee Jones every time she
• 54:02
  Speaker 1: comes through town. Yeah, also small venue, she's amazing, Amy
• 54:07
  Speaker 1: man Or go down the list.
• 54:08
  Speaker 2: So I love that. So Ario speedwack In it was touring.
• 54:10
  Speaker 2: They're doing like huge you know, stadium arenas whatever, and
• 54:14
  Speaker 2: but they most of these bands do like their opening
• 54:16
  Speaker 2: shows kind of like a quiet practice show. So the
• 54:20
  Speaker 2: beginning of their tour was in Salaina, Kansas, just like
• 54:23
  Speaker 2: a tiny town five hours away, and they did this
• 54:26
  Speaker 2: little arena that holds maybe I don't know, two thousand people,
• 54:29
  Speaker 2: like Tony's Pizza Arena or something. So I went there.
• 54:33
  Speaker 2: My friends are like, they're coming to can't see. I mean,
• 54:35
  Speaker 2: this is gonna be I was thinking, this is gonna
• 54:36
  Speaker 2: be awesome, you know, just and sure enough it was
• 54:39
  Speaker 2: just absolutely incredible.
• 54:40
  Speaker 1: Anytime you get to see a big name, yes in
• 54:43
  Speaker 1: a small or even though like so, I haven't seen Journey,
• 54:49
  Speaker 1: but I know they're but I'll tell you who. And again,
• 54:51
  Speaker 1: a lot of this is sixties, seventies, eighties, I've seen
• 54:54
  Speaker 1: Steve Miller a couple of times in small venues. He's amazing.
• 54:59
  Speaker 1: We saw Peter Frampton. I mean, Frampton Comes Alive was
• 55:03
  Speaker 1: the best selling live album for like, I don't know
• 55:05
  Speaker 1: how many decades it may still as far as I know,
• 55:07
  Speaker 1: that may still be the best selling live album of
• 55:09
  Speaker 1: all time. Seeing him in like with three thousand people,
• 55:13
  Speaker 1: he was feeling, you know, giant. Who else have you seen?
• 55:18
  Speaker 2: Oh god, I'm just trying to think. I saw The
• 55:20
  Speaker 2: Killers recently. That was one of my favorites for sure.
• 55:23
  Speaker 2: They were incredible. I just saw last week a band
• 55:28
  Speaker 2: called Cake, which is like.
• 55:30
  Speaker 1: A reluctantly crashed at the starting line. So comfort eagle.
• 55:41
  Speaker 2: They were amazing.
• 55:42
  Speaker 1: I have three or four albums of theirs, and they're
• 55:44
  Speaker 1: all spectacular. That's right, spectacular. Let me let me give
• 55:48
  Speaker 1: you the two that will make you jealous. John Fogerty
• 55:51
  Speaker 1: at Radio City his open tour. By the way, his
• 55:54
  Speaker 1: two sons are his backup band.
• 55:57
  Speaker 2: Oh that's cool. So I learned how old I was
• 56:00
  Speaker 2: ding when I went to a couple of concerts. I
• 56:01
  Speaker 2: saw Cheap Trick, who I think best rock and roll
• 56:03
  Speaker 2: song of all time is Surrender. I'll die on this hill.
• 56:06
  Speaker 2: But anyway, they were playing and the son, his son
• 56:09
  Speaker 2: was the guitarist. And then the next week I saw
• 56:11
  Speaker 2: the Eagles and as you know, Glenn Frey passed away,
• 56:16
  Speaker 2: but his son replaced him and sounds like, sounds exactly like,
• 56:20
  Speaker 2: plays the same guitar. And then, oh gosh, then I
• 56:24
  Speaker 2: saw the Food Fighters the next week and his daughter
• 56:26
  Speaker 2: comes on and say, you know, Dave Grohl's daughter comes
• 56:29
  Speaker 2: on and sings a song. I told my wife, I'm like,
• 56:31
  Speaker 2: we are I am so old you know that I'm
• 56:33
  Speaker 2: now watching like these bands kids play right there.
• 56:37
  Speaker 1: That's right. James Taylor brings his kids out to sing
• 56:39
  Speaker 1: with him. He's got a son and a daughter.
• 56:42
  Speaker 2: And him about two months.
• 56:44
  Speaker 1: His tour is always great, the one that might make
• 56:47
  Speaker 1: you jealous. I don't know if this is exactly you
• 56:48
  Speaker 1: a genre, and I don't even know how I got
• 56:51
  Speaker 1: these tickets. But at the Bowery Ballroom, which is like
• 56:54
  Speaker 1: a basement that holds two hundred people, I saw Chrissy
• 56:58
  Speaker 1: Hines and the Pretender.
• 56:59
  Speaker 2: Oh you know they're come and I can't say next month,
• 57:01
  Speaker 2: can I.
• 57:01
  Speaker 1: Tell you something? Go see the show? She is great.
• 57:05
  Speaker 1: The replacement musicians you got, They're just they're just really
• 57:10
  Speaker 1: really awesome. And I'll see I'll see Steely Dan every
• 57:14
  Speaker 1: time they come through town. Like, I'm definitely on the
• 57:16
  Speaker 1: verge of you know, the boomer music. We just saw it.
• 57:20
  Speaker 1: Neil Young at Forest Hills Outdoors always just great, what
• 57:24
  Speaker 1: a great show. Yeah, all right, so so much with
• 57:27
  Speaker 1: fun with music. Let's jump to our last two questions
• 57:32
  Speaker 1: that people seem to really like, which is what sort
• 57:35
  Speaker 1: of advice would you give to a recent college grad
• 57:38
  Speaker 1: interested in a career in either investment management or becoming
• 57:43
  Speaker 1: an advisor?
• 57:44
  Speaker 2: So I would tell them pick your starting place very carefully,
• 57:47
  Speaker 2: pick the firm that you're going to go to out
• 57:49
  Speaker 2: of the beginning, because that can really start to dictate
• 57:51
  Speaker 2: your destiny. Right, do you want to be in the
• 57:53
  Speaker 2: brokera's side, do you want to be on the independent side.
• 57:55
  Speaker 2: Do you enjoy sales? Do you enjoy advising? Really try
• 57:59
  Speaker 2: to get to the right place as close to the
• 58:02
  Speaker 2: right role as possible. If you're given a choice like, hey,
• 58:05
  Speaker 2: you can make X thousand dollars and be in this group,
• 58:08
  Speaker 2: or you can make more and be in that group,
• 58:09
  Speaker 2: choose the group that is more where you want to
• 58:11
  Speaker 2: be In the long run, I found that proximity is
• 58:15
  Speaker 2: a very big indicator of success. You know who y're around.
• 58:18
  Speaker 2: Are you in the right company? Are you around the
• 58:20
  Speaker 2: right people. If you're at the right company with the
• 58:22
  Speaker 2: right people and you do the right things, great things
• 58:24
  Speaker 2: are going to happen. But you can do the right thing,
• 58:26
  Speaker 2: be in the wrong company or not around the right people,
• 58:28
  Speaker 2: it's not going to work. So those first decisions are
• 58:30
  Speaker 2: really important.
• 58:31
  Speaker 1: Huh, really really interesting. And our final question, what do
• 58:34
  Speaker 1: you know about the world of investment management, financial planning,
• 58:39
  Speaker 1: building a firm entrepreneurship today that might have been helpful
• 58:44
  Speaker 1: twenty five thirty years ago when you were first getting started.
• 58:47
  Speaker 2: Well, I think when I you know, when we started
• 58:48
  Speaker 2: doing what we were doing twenty years ago, we were
• 58:51
  Speaker 2: doing I set it up that I want to do
• 58:53
  Speaker 2: all these things in one place now, this investment of lolosophy,
• 58:55
  Speaker 2: because I thought it was the right thing to do
• 58:56
  Speaker 2: for the client. I thought it was fun to give
• 58:58
  Speaker 2: advice that way. The people really benefited from it, got
• 59:01
  Speaker 2: a lot of positive feedback. But I didn't really think
• 59:03
  Speaker 2: about it being an enterprise that became accidental and really
• 59:08
  Speaker 2: the effort to go Hey, this is an enterprise. We
• 59:10
  Speaker 2: could really you know, grow this in that strategic way
• 59:13
  Speaker 2: probably came about ten years later. You know, if I
• 59:16
  Speaker 2: had a time machine, I would have made that light
• 59:18
  Speaker 2: bulb go off on day one and accelerated a lot
• 59:22
  Speaker 2: of things.
• 59:22
  Speaker 1: And I'm going to give you credit because you're the
• 59:25
  Speaker 1: person who first put that idea in my head a
• 59:28
  Speaker 1: couple of years ago, that you're not building a firm,
• 59:30
  Speaker 1: You're building an enterprise and that's a big difference. Yes,
• 59:33
  Speaker 1: thank you, Peter for being so generous with your time.
• 59:36
  Speaker 1: We have been speaking with Peter Maluke, CEO and president
• 59:39
  Speaker 1: of Creative Planning. If you enjoy this conversation, well check
• 59:44
  Speaker 1: out any of the previous five hundred or so we've
• 59:47
  Speaker 1: done over the past ten years. You can find those
• 59:50
  Speaker 1: at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcasts.
• 59:56
  Speaker 1: And check out At the Money, my new podcast, short
• 59:59
  Speaker 1: ten minute conversations with experts about topics that affect you
• 1:00:04
  Speaker 1: and your money, earning it, spending it, and most importantly
• 1:00:08
  Speaker 1: investing it At the Money in the Masters in Business
• 1:00:11
  Speaker 1: podcast feed. I would be remiss if I do not
• 1:00:15
  Speaker 1: thank the Cracked team that helps put these conversations together
• 1:00:18
  Speaker 1: each week. Sarah Livesey is my audio engineer. Attika Valbrun
• 1:00:22
  Speaker 1: is my project manager. Anna Luke is my producer. The
• 1:00:26
  Speaker 1: head of Podcasts at Bloomberg is Sage Bauman. Sean Russo
• 1:00:30
  Speaker 1: is my researcher. I'm Barry Ridolts. You've been listening to
• 1:00:34
  Speaker 1: Masters in Business on Bloomberg Radio.